Once you’re finished with your due diligence, the next step is to secure the purchase. Dental practice sales begin with a successful Offer and move through to a successful closing.
This page will help you understand the process, that involves a lot of detail. If the practice is represented by an agent, they will write-up your instructed offer.
Be sure that you state a time-fuse concerning how long the offer is valid along with those very important conditions that need to be satisfied prior to the purchase being finalized.
Usual and customary conditions include:
- Completing a satisfactory patient chart audit
- Securing satisfactory financing
- Securing acceptable tenancy arrangements for the suite housing the practice
- Proof that the assets transfer free-and-clear of all liens and encumbrances
- Working out a mutually agreeable definitive sales contract
- Agreement that the sale be conducted through a neutral escrow holder
If your Offer is accepted, you now have secured your interest in acquiring the practice. An escrow needs to be opened. Expect 60-days to complete all items that are required to effect this change in ownership.
Submit a loan application immediately to the lender you want to provide financing. You should also contact your insurance agent(s) to arrange for the necessary policies to cover your practice. Since you are buying, dental practice coverage needs to be tailored to your specific business.
It is important that you immediately apply for the needed life and disability insurance. This is important because policies that were not applied for right away have delayed many closings.
While your loan request is being processed, the definitive sales contract needs to be resolved. Expect the seller to deliver a proposed draft. If the seller is being represented by an agent, the agent will tender this draft.
Don’t be surprised if the seller asks you to refrain from contacting the landlord until you have received your loan approval. Once you have this, the seller will then feel more secure about you contacting the landlord to change the tenancy arrangements.
If your seller owns the building, the seller or agent will provide you with a premise lease for your review. If you are acquiring the building, this is a different exercise since real property financing is required, and specific disclosures need to be made. If so, it is important that your legal advisor be well versed in the acquisition of real property.
With the seller’s assistance, you should immediately contact the PPOs and HMOs utilized by the practice so that you can be credentialed as a provider for these plans. This can be tricky if your seller still wishes to maintain discretion concerning the pending sale. Work carefully with the seller on this item so no unnecessary confidences are leaked to the staff.
Additional checklist items include:
- Obtaining a business license
- Obtaining an employer ID number
- Obtaining an EPA number
- Notifying the DEA of your change of address
- Preparing and submitting a fee schedule to Delta Dental
- Completing the registration and licensing of any of the seller’s software you wish to retain
- Obtaining any new software and hardware you want
- Ordering practice stationery and business cards
- Ordering equipment items that allow you to operate at your optimum level
- Ordering special supplies that are not stock items.
- You and your seller may also wish to plan an Open House
With the financing, tenancy arrangements and definitive sales contract now proceeding, it is time to go public about the transition. Write an appropriate letter of announcement with an action plan crafted between you and the seller. Address the announcement to staff, how the office should script its response to surprised and inquiring patients, and how patient scheduling should be handled.
The equipment needs to be inspected at this time to document its operating condition. If repairs are necessary, they should be made at the seller’s expense. And a final equipment inspection needs to occur by the buyer just before the sale is completed. With the closing now just days away, the contract of sale, premise lease and the loan documents need to be finalized and the escrow funded.
Make plans to spend some time with the staff. You and they need to get to know each other. You’re your seller’s permission, conduct individual interviews prior to the transfer date of the practice. Impress upon them that you plan on retaining their services. They are your biggest asset. Patients are more inclined to come in for their first appointment if the staff is retained.
Your retention of the staff transmits to the patient community that they approve of this change. Think about it. This is a strong endorsement of you as the successor to the practice. As the staff comes to trust you, imagine how strong their words of encouragement will be to inquiring patients asking how things are in the changed practice.
Buyer Information: The Closing
The escrow closes when all conditions have been satisfied. You now receive keys to your practice.
All service providers, vendors, utilities, internet provider, website host and the telephone company need to be immediately notified so that specific seller accounts are closed, and new accounts are opened in your name.
Conduct an important morning huddle with your staff before you start your first day. Impress upon them that you are looking to them for guidance during this transition period. Go over the scripted message for the front desk, dental assistants and hygienists. You can now start treating patients!
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